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"Advice offered by Marc Hebert, president of\u00A0The Harbor Group Inc., a certified financial planner. If you have any questions about finance or if you'd like to suggest a future topic, email webstaff@wmur.com.Obtaining a certain rate of return probably drives most investor\u2019s choices -- but managing investment-related taxes should be another factor in making decisions.Consider Tax-ExemptMunicipal Bonds are typically exempt from federal taxes and may be exempt from state and local income taxes as well.Tax-Efficient Mutual FundsSome mutual funds are managed in ways to minimize taxes to investors. Some tactics include:-- Minimizing portfolio turnover-- Selling loss positions in the fund to counter positions sold at a gain-- Includes stocks that pay little in dividends-- Index funds may have little asset turnover as they match an indexShifting Income to MinorsGiving assets to children via a Uniform Gifts to Minors Act account or a Uniform Transfers to Minors Act may shift some of the tax burden into the child\u2019s lower tax rate. Currently a taxpayer can gift $14,000 to any individual gift tax free. The caveat here is to be aware of the \u201CKiddie\u201D tax which reduces the tax benefit of shifting income.Current tax rules state that the first $1,000 of a child\u2019s investment income generally is tax-exempt, the next $1,000 of unearned income generally is taxed at the child\u2019s tax rate, and unearned income over the $2,000 generally is taxed at the parent\u2019s tax rate if the child is under age 19 (or is a full-time student under age 24) at the end of the year.Tax and Foreign InvestmentsInvestors may want to review the special tax consequences associated with investing internationally. One example is the availability of a tax credit for foreign taxes paid that can be used to offset U.S. federal income tax obligations.Qualified Retirement PlansThe earnings growth on contributions made to qualified retirement plans -- 401(k)s for example -- is tax deferred. Taxes aren\u2019t paid until the funds are withdrawn. Don\u2019t forget Traditional and Roth IRA contributions as well. Review your eligibility prior to making contributions.These are just a few tax considerations when making investment choices and should be part of an investment plan. After all, the less tax you pay the more money is yours to keep. For additional information we suggest you consult your financial and tax professional."^^<http://www.w3.org/2001/XMLSchema#string>
<http://www.wmur.com/article/money-matters-think-tax-efficiency-in-all-your-investment-choices/5193006>